TEXT-Fitch affirms American Electric Power at 'BBB'

(The following statement was released by the rating agency)

Nov 10 - Fitch Ratings has affirmed the Issuer Default Rating (IDR) and
debt ratings for American Electric Power Co. (AEP.N: Quote, Profile, Research) (AEP) as follows:
--Long-term IDR at 'BBB';
--Senior unsecured debt at 'BBB';
--Junior subordinated debentures at 'BBB-';
--Short-Term IDR and commercial paper at 'F2'.
The Rating Outlook is Stable. Approximately $1 billion of AEP debt is affected.
AEP's ratings take into consideration the company's stable cash flow generation
and earnings base from the regulated utility operations, generally balanced
regulatory environments, and solid liquidity position. The company's
consolidated credit metrics are consistent with utility parent peers in the
'BBB' rating category with unadjusted EBITDA to interest at 4.8 times (x) and
funds flow coverage at 4.5x for the nine month period ended Sept. 30, 2008.
Debt leverage, as measured by the ratio of debt to total capitalization, was
60.1% for the same time period. Rating concerns primarily relate to AEP's
exposure to carbon legislation given the company's large coal-fired generation
fleet, as well as weakening economies in several service territories,
particularly Ohio, Michigan and Kentucky.
AEP recently announced it was reducing its 2009 capital expenditure budget to
$2.6 billion, a decrease of approximately $750 million from previous forecasts.
Capital expenditure (capex) for 2008 is likely to approximate 2007 levels at
around $3.5 billion. The decision to reduce discretionary capital spending is
related to the disruption in the capital markets. However, capital spending
will likely pick up once again when management believes the capital markets are
viable. As yet, the company does not expect to lower 2010 capex.
On Oct. 8, 2008, AEP drew down an additional $1.4 billion from its credit
facilities to bolster its cash position during the current volatility in the
financial marketplace. The company has approximately $4 billion in credit
facilities, with staggered maturities from April 2009 through April 2012. As of
Oct. 28, 2008, AEP has net available liquidity of $2.7 billion, including cash
on hand of $1.4 billion. When market conditions improve, AEP plans to repay the
amounts drawn under the credit facilities, re-enter the commercial paper market
and issue other long-term debt. If there is not an improvement in access to
external capital, the company should have adequate liquidity to support its
planned business operations and construction program through 2009. At a
minimum, the company plans to re-finance the remaining $180 million of debt due
in 2008, and the $300 million of debt due in 2009 with additional debt
issuances if market conditions are satisfactory or through current available
liquidity.
The Stable Outlook reflects Fitch's expectation that AEP will continue to
benefit from the stable financial profiles of its regulated subsidiaries, as
well as an overall continuation of generally balanced regulatory environments,
which includes a constructive outcome to the rate filings in Ohio for Ohio
Power Co.(IDR 'BBB+') and Columbus Southern Power Co. (IDR 'A-').
AEP is one of the largest electric utilities in the United States, owning
nearly 38,000 megawatts of generating capacity and delivering electricity to
more than five million customers in 11 states, including Ohio, Indiana, West
Virginia, Virginia, Kentucky, Michigan, Oklahoma, Texas, Louisiana and
Arkansas.
(New York Ratings Team)